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BA cautious for 2004
British Airways has exceeded market expectations by posting pre-tax profits of £230 million following rigorous cost cutting over the past two years.
The airline credits much of its financial performance to exceeding its Future Size and Shape targets. BA achieved cost savings of £869 million against a target of £650 million and has cut staff by 13,082 against a target of 13,000.
However, BA chairman Lord Marshall said market conditions remained tough, with fuel costs expected to be £150 million more in 2004 than last year. In an attempt to combat the negative effects of this, the airline introduced a £2.50 per sector fuel surcharge last week.
Lord Marshall was cautious about the coming year. He predicts revenue improvement of 2-3% but said that controlling costs would continue to be a priority. Chief executive Rod Eddington mirrored this view when he said there was “still more to do” in terms of restructuring BA’s shorthaul strategy.
Operating profits for the year to March 31 were £405 million, up from £295 million the previous year. The results were boosted by a good fourth quarter that saw pre-tax profits rise to £45 million from a £200 million loss last year.
BA has also managed to reduce distribution costs by pushing more business online. According to the airline, over half of shorthaul leisure fares are now being bought at www.ba.com, and two thirds of passengers are travelling on an e-ticket in the UK.
At 10.23am, BA shares were down by 4.15% to 236.5 pence.
Report by Ginny McGrath
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